Review wills for recent QTIP changes

Article Abstract:

The qualified terminal interest property (QTIP) marital deduction provisions were drawn up for the benefit of married couples who would like to minimize estate taxes on the death of the first spouse. These provisions allow a decedent to decide on the ultimate disposition of QTIP property even as the decedent can still benefit from any marital deduction otherwise available. To qualify for minimal estate taxes, however, a QTIP marital deduction must satisfy certain requirements, which include that the property must pass from the decedent, and that a qualifying income interest must be granted to the surviving spouse for life. Meanwhile, wills and revocable trust documents must be periodically reviewed as recent legislation, administrative rulings and court decisions have expanded the qualifications under which a property can qualify for a QTIP or reverse QTIP election.

Personal Tax Planning, Analysis, Personal finance, Tax planning, Estate tax, Estate taxes, Qualified terminable interest property, Qualified terminable interest property trusts, Marital deduction

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Not all heirs need consent to special-use election

Article Abstract:

The Tax Court has ruled that an estate may opt to have a partial election on qualified property using special-use valuation rules, even if not all co-tenants have granted their consent to the election. The ruling was made in a case involving a decedent who left farm property to his four children, only two of whom consented to the partial election of special-use valuation on the property inherited. The ruling, which is cited in Gettysburg National Bank, 70 AFTR2d 92-xxx, 92-2 USTC / 60,108 (DC Pa., 1992), rejected the IRS assertion that the failure to secure the consent of other co-tenants rendered the election invalid. The Tax Court, interpreting Section 2032A, ruled in favor of the estate and upheld the validity of the partial election.

Inheritance and succession

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Marital deduction: less to spouse may reduce overall tax

Article Abstract:

Section 2056(a) allows unlimited use of the marital deduction. This clause permits estates to significantly reduce tax on the estate of the first to die by transferring property to the surviving spouse. However, using the marital deduction to the fullest does not necessarily mean that a minimum total tax will result. This is because the transfer of property to a surviving spouse can affect the estate tax imposed on the surviving spouse, as well as the tax treatment of other beneficiaries. Therefore, in estate planning, several factors must be considered, among them, the overall tax on the combined estates and the tax shelter provided by Section 2010(a), which exempts $600,000 of either estate under the unified credit program.

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